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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2021

Items Measured at Fair Value on a Recurring Basis

As of December 31, 2021 and December 31, 2020, the Company held certain assets and liabilities that were required to be measured at fair value on a recurring basis.

The following tables are summaries of fair value measurements and hierarchy level as of:


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	—	$	—	$	—	$	—
Equity securities	558		—		—		558
Fixed maturity debt securities, including cash equivalents	—		135,346		—		135,346
Total Assets	$	558	$	135,346	$	—	$	135,904
Liabilities:


Merger warrants liability	3,941		2,350		—		6,291
Earnout shares liability	—		—		7,679		7,679
Total Liabilities	$	3,941	$	2,350	$	7,679	$	13,970


	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	405	$	—	$	—	$	405
Equity securities	375		—		—		375
Fixed maturity debt securities	246		411		—		657
Total Assets	$	1,026	$	411	$	—	$	1,437
Liabilities:
Redeemable convertible preferred stock tranche obligation	$	—	$	—	$	2,832	$	2,832
Historic warrants liability	—		—		144		144
Total Liabilities	$	—	$	—	$	2,976	$	2,976

Money market funds consist of highly liquid investments with original maturities of three months or less and classified in restricted cash in the accompanying consolidated balance sheets.

The Company recognizes transfers between the levels as of the actual date of the event or change in circumstances that caused the transfer. There were no transfers between the levels during the years ended December 31, 2021 and 2020.

The following tables set forth a summary of changes in the estimated fair value of the Company’s Level 3 redeemable convertible preferred stock tranche obligation, historic warrants liability and earnout shares for the years ended December 31, 2021 and 2020:


	January 1, 2021		Issuances		Settlements		Change in fair value		December 31, 2021
Redeemable convertible preferred stock tranche obligation	$	2,832	$	—	$	(2,832)	$	—	$	—
Historic warrants liability	144		—		(144)		—		—
Earnout shares liability	—		74,284		—		(66,605)		7,679
Total	$	2,976	$	74,284	$	(2,976)	$	(66,605)	$	7,679


	January 1, 2020		Issuances		Settlements		Change in fair value		December 31, 2020
Redeemable convertible preferred stock tranche obligation	$	3,755	$	—	$	—	$	(923)	$	2,832
Historic warrants liability	115		15		—		14		144
Total	$	3,870	$	15	$	—	$	(909)	$	2,976

The fair value of the earnout shares was estimated by utilizing a Monte-Carlo simulation model. The inputs into the Monte-Carlo pricing model included significant unobservable inputs. The table below summarizes the significant observable inputs used when valuing the earnout shares as of:


	December 31, 2021		January 21, 2021
Expected volatility	80.00	%	80.00	%
Starting stock price	$2.27		$11.31
Expected term (in years)	4.1 years		5 years
Risk-free interest rate	1.04	%	0.45	%
Earnout hurdle	$12.50-$15.00		$12.50-$15.00

Items Not Measured at Fair Value on a Recurring Basis

In the fourth quarter of 2021, we recorded asset impairments related to a long-lived asset group—a hub location. Assets that are impaired are recorded to their fair value. See Note 9, Property and Equipment, Net, for additional information regarding the charges incurred and the net carrying value of the asset group remaining.

The carrying amounts of restricted cash, accounts receivable and accounts payable approximate fair value because their respective maturities are less than three months. The carrying value of the Ally Financial floorplan notes payable outstanding as of December 31, 2021 approximates fair value due to its variable interest rate determined to approximate current market rates and the short-term nature of the notes payable.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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